More privacy restrictions or fair decision?

I can only talk about how it is in the US. In the US the photo can be used for editorial purposes but not for promotional purposes without consent. If the court considers this photo promotional it would have to consider almost any photo in a newspaper promotional because every photo in a newspaper is intended to promote the sale of the paper.

If the issue is the newsworthiness of the photo then the court is making itself the judge of what belongs in a newspaper and what doesn't. I doubt if any court is the US would want to put itself in that position. I also doubt that the Supreme Court would allow it to. The US courts don't like to place restrictions on the First Amendment which allows freedom of the press.

Yes it's a delicate balance. As darklamp suggested the deciding factor could be the security of the children… plastering their faces all over the place in a national newspaper could increase the chance of unwanted attention from the sort of stalker who might fancy their chances of squeezing money out of rich parents.

...been a case where that happens? That is, a kidnapper or child molester saw a kids photo in the newspaper, and hung out in that area waiting for them to appear again, then follow them and later abduct them?

Yes the kids were 'in public' by being in a park in the first place, but I don't like the idea that 'anything goes' in terms of taking and (more importantly) publishing photos just because of that. People have to be in public at some point, unless they want to live in permanent disguise or stay indoors for ever: being 'in a public place' (taking your kid to school, going to the shops…) should not be seen as tacit permission that paparazzi are immediately welcome, especially where children are concerned. I applaud the decision and hope it sets a precedent.

Most kids would be overjoyed to have their photo printed in a newspaper or magazine. I'm thinking this kid is no exception. Regardless, this fear of public photos of children leading to disaster is nothing more than irrational fear talking -- no more valid than someone claiming that taking their photo will steal their soul.

Just my opinion!

For sure, and for me as well. But, if I were to place a bet, I know where I'd be putting my money.

best wishes

PS (edit)… the newspaper argues that they were acting legally, and they may have a point. But if they acted with a little bit more restraint in cases like this - voluntarily choosing to behave like reasonable human beings once in a while - then they wouldn't (in the UK) be facing the compulsory regulation that they are complaining about.